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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Prompt Payment — Overview of Requirements
Exemptions and Waiver

Potential Exemption for Federal Funds

The requirements described in this section do not apply to a payment made by a state agency if the terms of a federal contract, grant, regulation or statute prevent the agency from making a timely payment with federal funds.

Potential Exemption for Higher Education Payments

No interest accrues or may be paid on a payment if:

  • The payment is made from the institutional funds of an institution of higher education, and
  • The total amount of interest that otherwise would have accrued is equal to or less than $5.

Waiver Not Allowed

A person may not waive any right or remedy described in this section if the right or remedy is granted by Chapter 2251.004, Government Code. A purported waiver of any right or remedy granted by that chapter is void.

Definitions

Institution of higher education
Has the meaning assigned by Texas Education Code Section 61.003.
Payment
Money owed to a vendor.
Person
Includes an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association and any other legal entity.
State agency
  • A board, commission, department, office or other agency in the executive branch of state government created by the constitution or a statute of this state, including an institution of higher education as defined by Texas Education Code Section 61.003.
  • The Legislature or a legislative agency.
  • The Supreme Court, the Court of Criminal Appeals, a court of appeals, a state judicial agency or the State Bar of Texas.

Source for definitions [+]

Texas Government Code Section 2251.001(1)–(2), (4)–(5), (7)–(8), (10); Code Construction Act, Texas Government Code Section 311.005(2).

Sources [+]

Texas Government Code Sections 2251.002(a)(3)–(4), 2251.026(j). 1 Texas Administrative Code Section 114.7 (2003) (rule of the comptroller); 16 Texas Administrative Code Section 25.480(c) (2003) (rule of the Public Utility Commission of Texas about interest payable to certain retail electric providers); 40 Texas Administrative Code Section 19.2604(h) (2003) (rule of the Texas Department of Human Services saying that the department, under certain circumstances, owes no interest on payments not made by the deadline provided in the prompt payment law). Opinion of the Texas Attorney General No. GA 302 (2005) (a governmental entity may not consent to a provision in a contract with a private person that the laws of another state apply instead of the Texas prompt payment law). Opinion of the Texas Attorney General No. GA-429 (2006) (an implied contract subject to the Texas prompt payment law exists between a public school district and a municipally owned utility).

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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